Vet students at risk of being priced out

By
Matthew Knott

July 13, 2014, 3 a.m.

Aspiring vets are set to be among the hardest hit by the Abbott government's planned university changes, with new modelling showing student debts could soar to $250,000 - a 150 per cent increase - and take some graduates their whole working life to pay back.

Vet students at risk of being priced out

Big debts: Veterinary science student Tamara Mobbs could face university debts of more than $250,000 when she graduates. Photo: Les Smith

Vet students will be some of the hardest hit graduates under the planned federal government university changes. Photo: AFR

Aspiring vets are set to be among the hardest hit by the Abbott government's planned university changes, with new modelling showing student debts could soar to $250,000 - a 150 per cent increase - and take some graduates their whole working life to pay back.

The Coalition wants to allow universities to set their own fees, peg student debts to the ten-year government bond rate and cut course funding by an average 20 per cent.

Veterinary graduates are expected to be hardest hit because of lengthy degrees, high course costs, low starting salaries and the fact 80 per cent of veterinary science graduates are women.

The conclusion echoes the findings of the National Centre for Social and Economic Modelling (NATSEM), which shows the impact of the changes would be worse for women, and felt most harshly by students of low-pay occupations such as nursing or education.

Under the government's new funding plan, the Commonwealth will fund veterinary students at the same rate as dentistry and medical students despite the lower average salary of $75,000 for vets.

Women graduates who take time off to have children would be worst off because of the compounding interest on their debts, the Australian Veterinary Association says.

The analysis shows outcomes for veterinary students in a six-year degree, depending on whether they stay at work full-time and the level of fee increases, ranging from:

■ Total costs of $271,670, taking 37 years to repay, if universities recover the income lost from funding cuts, and a graduate spends five years out of the workforce (the situation of many working mothers).

■ Total costs of $250,330, taking 31 years to repay, if universities increase course fees by 20 per cent and a graduate remains at work.

■ Total costs of $185,625, taking 28 years to repay, if universities recover the cost of funding cuts and a graduate remains at work.

A six-year veterinary degree now costs $57,568 and would take a typical graduate 22 years to repay with the total debt amounting to $101,470. The AVA modelling assumes the current average starting salary of $47,300, annual pay rises of 3 per cent plus inflation, and a long-term bond rate of 5.21 per cent.

AVA president Julia Nicholls said fee deregulation would have a ''potentially disastrous'' impact on the sector and would deter disadvantaged and regional students from studying veterinary science.

The NATSEM modelling found that when a real interest rate is applied and the university tried to recoup the costs of a degree, a female science graduate would pay off her degree in 13.9 years, up from 8.4 years. Her total repayments would increase by an estimated $51,500, from $44,200 to $95,700.

A spokesman for Education Minister Christopher Pyne said universities will have to compete on price and quality.

''They will need to carefully consider the price point for their courses and what they offer, because students will have more power than ever to pick and choose the course that is right for them,'' the spokesman said.

''Vice-chancellors will potentially be able to cross-subsidise the more expensive courses they offer.''

Mr Pyne maintains competition between universities for students will prevent exorbitant price rises and could even drive down the cost of degrees.

Bruce Chapman, the architect of the HECS system, has spoken out against exposing students to compound interest, saying the proposal could force students to quit.